FOR A proud man like Lord Wolfson, yesterday's profits warning from Great Universal Stores must have really stuck in the craw. It was not the first, as he tried to describe it, but GUS's third in three years. With the shares at their lowest point since 1993, the City is beginning to ask serious questions about this company. The threat of takeover and an early exit for the Great Lord can no longer be ruled out.

Lord Wolfson didn't help his cause by treating analyst's questions with barely disguised contempt. Some now feel he has no strategy to put the creaking ship back on course. The root of the problem is more than just the retail malaise. Management has been slow to realise the threats to its existing businesses and equally slow to take advantages of other opportunities such as the Internet.

Though Lord Wolfson should be congratulated for the acquisition of the Experian financial information business, he has spent the last few years loftily waving away City fears that GUS's home shopping business is in structural, long-term decline. His own figures now reveal that the doomsayers were right.

Five years ago only 20 per cent of GUS shoppers had a credit card. Now the figure is over 50 per cent and rising. Consumer no longer need to put up with high catalogue prices to a gain access to credit. They can pick up the plastic and shop at the new breed of discounters like Matalan and New Look instead.

The plan is to push consumers towards the new Argos Additions catalogue and cut costs at the old agency business faster than the decline in sales. But with the core home shopping business possibly plunging into loss next year that might be difficult.

The other conundrum is why this company has been so slow to take advantage of e-commerce activities. With its huge call centre, delivery network and credit checking strengths, GUS should have be at the forefront of e-commerce opportunities. It could also have used the internet to target a younger, wealthier customer base than its typical cash-strapped shopper. In spite of being one of the first UK retailers to have a transactional website (ShoppersUniverse four years ago) it has allowed itself to be outmanoeuvred by rivals. It looks like a long haul back to respectability.